Bitcoin Outlook: Will BTC Break Below $65K as Fed Rate Bets and US Election Weigh?

BTC Tests Support at $65,000 as Market Retreats

On Wednesday, October 23, BTC declined by 1.09%, erasing a 0.12% gain from the previous session to close at $66,649. Significantly, BTC tested buyer demand at $65,000 with a low of $65,225 before retaking the $66,000 handle. The broader crypto market fell 1.45% to a total market cap of $2.242 trillion.

Shifting sentiment toward the US Presidential Election and the Fed rate path impacted demand for riskier assets, including BTC.

Fed Rate Cut Bets Cool Impacting BTC Demand

On Wednesday, the Nasdaq Composite Index slid by 1.60%, reflecting concerns about the Fed rate path. 10-year US Treasury yields climbed to a mid-week high of 4.260%, the highest since July. Recent US economic indicators continued to signal a resilient US economy, testing investor bets on multiple Q4 2024 Fed rate cuts.

The upcoming US Presidential Election is adding to market uncertainty. The latest polls showed Kamala Harris leading Donald Trump by 1.8 points. However, Trump has narrowed the gap from a previous 3.7-point deficit. While Harris leads in the polls, the betting platform Polymarket gives Trump a 61.1% chance of winning versus 39.0% for Harris.

Markets expect a Trump presidency to push inflation higher, potentially leading to a more hawkish Fed rate path. A more hawkish Fed rate path may affect demand for riskier assets. However, Trump’s proposed crypto policy goals may boost longer-term BTC demand, potentially overshadowing the effects of a more hawkish Fed rate path.

In addition to pledging to fire SEC Chair Gensler on day one in office, Trump also wants to add BTC to the US strategic reserves. A shift in the US government’s stance on BTC could materially tilt the supply-demand balance in BTC’s favor and reduce oversupply risk.

The US government currently holds 203,239 BTC, which could increase substantially, especially if the US government becomes a BTC hodler.

US BTC-Spot ETF Market Sees Outflows

On Tuesday, October 22, the US BTC-spot ETF market saw total net outflows of $79.1 million, ending a seven-day inflow streak. On Wednesday, the US BTC-spot ETF market faces a second consecutive day of net outflows. According to Farside Investors:

• ARK 21Shares Bitcoin ETF (ARKB) saw net outflows of $99.0 million (Previous Day: -$134.7 million).
• Bitwise Bitcoin ETF (BITB) had net outflows of $25.2 million. (PD: zero net flows).
• VanEck Bitcoin ETF (HODL) reported net outflows of $5.6 million. (PD: +$3.8 million).

Excluding iShares Bitcoin Trust (IBIT) flow trends, the US BTC-spot ETF market saw total net outflows of $125.1 million. Despite the possibility of a second day of net outflows, demand for US BTC-spot ETFs surged in October. In the current month, the US BTC-spot ETF market has seen total net inflows of $2,482.8 million compared to September’s $1,262.8 million of net inflows.

Sustained inflows could counter oversupply risk, supporting a BTC return to $70,000.

Outlook: US Economic Indicators, the Fed, and BTC-Spot Flows

Investors should remain alert, with US economic indicators likely to influence the Fed rate path.

Upbeat US labor market data and private sector PMI figures on Thursday, October 24, may reduce bets on a December Fed rate cut, potentially reducing US BTC-spot ETF demand. Weaker demand could drag BTC below the crucial $65,000 level. Stay updated with our real-time BTC analysis for further insights on managing potential risks.

Technical Analysis

Bitcoin Analysis

Despite Wednesday’s loss, BTC hovers comfortably above the 50-day and 200-day EMAs, affirming bullish price signals.

A break above the $69,000 resistance level and October 21’s high of $69,402 could support a move to $70,000. Furthermore, a breakout from $70,000 may allow the bulls to test resistance at the all-time high of $73,808.

Investors should consider sentiment toward the Fed rate path, the US Presidential Election, and US BTC-spot ETF market flow trends.

Conversely, a drop below $66,500 could bring the $65,000 level into play. A fall through $65,000 may give the bears a run at the $64,000 support level.

With a 60.80 14-day RSI reading, BTC may climb to $70,000 before entering overbought territory.

Ethereum Analysis

ETH hovers below the 50-day and 200-day EMAs after Wednesday’s pullback, sending bearish price signals.

An ETH break above the 50-day EMA could support a move toward the $2,664 resistance level. Furthermore, a breakout from the $2,664 resistance level may bring the 200-day EMA into play.

US ETH-spot ETF market-related updates also require consideration.

Conversely, an ETH drop below $2,500 may signal a fall toward the $2,403 support level.

The 14-period Daily RSI reading, 49.50, indicates an ETH fall to the $2,124 support level before entering oversold territory.